Case: Tax Loss Denied for Selling Real Estate to Satisfy Visa Bribery Forfeiture Order (T.C. Memo) (IRC §165)

To allow a taxpayer a deduction for losses arising out of forfeited proceeds obtained through illegal activities would undermine public policy by permitting a portion of the forfeiture to be borne by the government, the U.S. Tax Court held in a memorandum opinion denying a loss deduction. Taxpayer was involved in a bribery scheme while working for the State Department in Vietnam in approving fraudulent U.S. visas. Taxpayer had the funds wired to a bank in Thailand and then used the proceeds to purchase real estate in Thailand. In filing his 2012 return, Taxpayer reported his salary but not the ...